Litigation and Dispute Resolution

Deemed Subdivisions – how to avoid hidden leasing costs

27 February, 2017

The Court of Appeal has recently affirmed a decision to hold a religious tribunal guilty of contempt of Court for trying to pressure one of its adherents into submitting to its jurisdiction for a commercial dispute, as opposed to bringing a claim in the Supreme Court of New South Wales. The case serves as a reminder of everyone’s right to have their commercial disputes heard by the civil courts, and to be able to do so free from pressure from religious bodies.

The genesis of the dispute

Live Group is a payment service provider based in Sydney. In 2016, they entered into a contract with SalesPort, a digital marketing company based in the United States, for social media marketing services. As is typical for commercial contracts, this agreement contained a dispute resolution clause. Less typical were the terms of this dispute resolution clause. The key directors of both SalesPort (Mr Kuzecki) and Live Group (Mr Barukh) are observant Orthodox Jews. The clause provided that if a dispute could not be resolved by the parties or via a third party, then the matter was to be heard and determined by Rabbi Gutnick, an Orthodox Jewish Rabbi and member of the Sydney Beth Din, which is a Rabbinical court.

A dispute between Live Group and SalesPort arose, and Live Group terminated the contract. Mr Kuzecki sought to invoke the jurisdiction of the Beth Din, and requested a Din Torah, being a final adjudication of the dispute pursuant to Jewish law. The Beth Din issued a summons to Mr Barukh, who wrote back stating that he did not intend to appear, that the Beth Din was not the appropriate forum to deal with the dispute, and that any claim should be brought before a civil court in Australia.

What followed was a series of emails and letters between various Rabbis and Mr Barukh’s solicitors. During this correspondence, it was stated that if Mr Barukh failed to submit to the jurisdiction of the Beth Din then he would be subject to various religious sanctions. Mr Barukh commenced proceedings in the Supreme Court of New South Wales against four Rabbis (being the three judges and the registrar of the Beth Din) seeking injunctions preventing the Beth Din from imposing religious sanctions for failing to submit to its jurisdiction, and seeking orders that the members of the Beth Din are in contempt of court.

What is contempt of court?

The dispute was heard at first instance by Sakar J of the Supreme Court. After briefly summarising the dispute, his Honour set out the following general principles on contempt of court:

  1. The law on contempt of court is grounded on the right of unimpeded access to the courts.
  2. It is of “extreme public interest” that no conduct should be permitted which is likely to prevent a litigant from having their case tried free from prejudice.
  3. A claimant for contempt of court must establish, to the criminal standard of proof, that the conduct has “as a matter of practical reality, a real and definite tendency to interfere with the course of justice”.
  4. Civil contempt involves disobedience to a court order or breach of an undertaking, while criminal contempt is where there is contempt in the face of the court or an interference with the course of justice.
  5. It is crucial to distinguish between proper and improper pressure on a litigant. Pressure may be actual or threatened, conditional or unconditional. The conduct in question may be lawful and still be improper pressure, so as to amount to contempt.

His Honour then proceeded to consider previous authorities where improper religious pressure had been put on a litigant. The first is Hillfinch Properties Ltd v Newark Investments Ltd, in which Slade J of the Chancery division of the High Court of the United Kingdom was prepared to accept that it is contempt of court for a rabbinical court to threaten practicing orthodox Jewish potential litigants with excommunication.

The other is Yeshiva Properties No 1 Pty Ltd v Lubavitch Mazal Pty Ltd, where Young CJ in Eq similarly found that putting pressure on a potential litigant of religious excommunication if litigation is pursued may be contempt of court, even where the pressure was put on the litigant before the proceedings commenced.

The principle can be neatly summarised from the words of Judge Sir James Wilde from the old case of In re Mulock [1864] 164 ER 1407:

“From the pressure of this threat [the plaintiff] seeks protection, and [they] claim a right to approach this court free from all restrain or intimidation. It is a right that belongs to all suitors … No one can doubt that the very offering of such a threat to a suitor in this Court, for such a purpose, is in itself, and quite independently of its subsequent fulfillment, a contempt of Court.”

That is, a threat of a sanction, religious or otherwise, may amount to improper pressure (even if it is something that someone is legally allowed to do) if the threat is aimed at stopping someone from exercising their right to petition a civil court for relief.

No exodus of the civil courts

As for the conduct in question in the present case, Mr Barukh argued that the various correspondence from the members of the Beth Din as to the consequences of him failing to submit to its jurisdiction was improper pressure. The members of the Beth Din argued that their communication was private, lawful, reasonable, and an accurate reflection of Halachic law.

The defendants also argued that they were not threatening religious sanctions for going to a civil court (in fact, Mr Barukh was not even seeking to bring proceedings at the time), rather the threats were aimed at securing his participation in the religious court, being the Beth Din.

Sakar J did not accept this distinction, calling it “sophistry” and “disingenuous”. This is because Mr Barukh, by necessary implication, would have to waive his right to be heard in a secular court by agreeing to have his case heard by the Beth Din. Therefore, whilst the Beth Din may say that the sanctions flow from Mr Barukh’s failure to participate, the “practical reality is the sanctions inevitably result from attending a secular court without the permission of the Beth Din”.

His Honour went on to find the members of the Beth Din guilty of various charges of contempt for their correspondence with Mr Barukh. His Honour stated that:

“Quite simply, to threaten reprisal … merely because of a firmly held view a civil court is the appropriate forum for the determination of a commercial dispute, is to not only threaten the integrity of the Court but its authority as the ultimate decision maker. There is no contest between the Beth Din and the relevant curial process in the State of New South Wales. The Beth Din is not entitled to insist – under threat of religious sanction – it is the only method by which an observant Jew is entitled to have his or her dispute determined. It is not to the point to simply categorise, in an attempt to trivialise, the Beth Din as purely religious. The Beth Din intends itself to be an exclusive jurisdiction over observant Jews, otherwise penalties ensue.”

On the question of religious freedom, his Honour went on to say that his finding:

“is not a restriction on religious freedom, it is a restriction in our democracy of any person holding and acting upon the view a civil court is the appropriate place for the determination of commercial disputes between Jews, or for that matter gentiles.”

The Supreme Court imposed fines between $20,000 and $10,000 to the various members of the Beth Din. They appealed to the Court of Appeal. The Court of Appeal, by majority (Bathurst CJ and Beazley P), upheld the findings of contempt, but reduced the fines to between $7,500 and $2,500.

The plurality agreed that the Beth Din’s conduct amounted to improper pressure on Mr Barukh. The Beth Din also sought to rely on the dispute resolution clause in the contract between SalesPort and Live Group, however the Court found that this clause did not bind the parties to submit to the Beth Din, and was not an agreement to have the dispute determined in accordance with Jewish law.

Judicial exegesis: what does this all mean?

The upshot of this dispute is that religious tribunals can not threaten sanctions against their adherents for expressing a preference, or actually seeking, that their disputes be agitated before the civil courts. Whether the sanction is for participating in the secular court, or for failing to participate in the religious one, is irrelevant: they are in substance two sides of the same coin.

We all have a right to approach a civil court for relief, and if someone (being a religious body or not) seeks to impose a sanction for doing so, this will be contempt of Court. Parties to commercial contracts can, and often do, seek a variety of different ways to resolve their disputes. Depending on those involved, that may include a reliance on theological principles. However, when someone wants to bring that commercial dispute into the domain of the Courts, it is improper to pressure them out of doing so on religious grounds.

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Canadian Court elevates thumbs-up emoji to signature status

In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract.   Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed.   Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)."   Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and   The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and   The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter.   Judgment At paragraph [36], Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship.   Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph [63]: "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest.   What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.

Published by Foez Dewan
29 August, 2023

Venues NSW ats Kerri Kane: Venues NSW successful in overturning a District Court decision

The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane [2023] NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty.  The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.

Published by Leighton Hawkes
18 August, 2023
Litigation and Dispute Resolution

Expert evidence – The letter of instruction and involvement of lawyers

The recent decision in New Aim Pty Ltd v Leung [2023] FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.

Published by Justin Pennay
10 August, 2023